Company Formation Is the Last Analog Bastion of Business

Companies are the legal container for roughly 85% of the world's economic value — nearly everything we build, invest in, or hold gets decanted into one. And yet the market for creating and maintaining them, worth an estimated US$100BN a year — almost three times the size of the entire global recorded music industry — still runs on the same rails it did fifty years ago: form filling, filing agents, fax machines, and government registries that treat an API request as a mild security threat.

Music went digital. Payments went digital. Company formation didn't. This is the honest version of why, and what's actually starting to change it.

A. Formation, funding and governance still run on analog rails

Three things happen to every company over its life — it gets formed, it raises money, and it's governed — and all three are still stuck in paper.

Formation is the most visible bottleneck. In civil law jurisdictions it usually means a notary and paid-up capital sitting in escrow before anything else happens. In common law jurisdictions it means a government-run registry, filing access gated to licensed intermediaries, and — in more places than you'd expect — an Official Gazette announcing major corporate events like it's still 1975. The process is standardized enough that lawyers barely think about it, and unfamiliar enough that most first-time founders find it quietly intimidating. That gap is a tax on entrepreneurial spontaneity nobody bothers to itemize.

Funding is worse, because it adds a second layer of lawyers to the first. Raising money from term sheet to closing is slow, paper-heavy and expensive precisely because negotiation still requires a human to draft, print, chase down a signature, and refile. Founders spend months in fundraising mode not because term sheets are hard, but because moving a piece of paper between six people takes six weeks.

Governance is where the friction becomes almost absurd. A director resolution should be one of the more automatable events in corporate life — bylaws already specify exactly who signs and in what order. In practice, getting a resolution signed by a Board scattered across time zones can still mean printing a PDF at a hotel business centre, signing it, scanning it back, and discovering the next morning that someone typed the wrong date and the whole chain has to happen again. None of this is a hypothetical — it's the ordinary week of anyone who sits on more than one board, and it explains why simple governance actions can take longer to execute than the underlying business decision took to make.

B. Why nobody's fixed this: "fiat companies"

The obvious question is why the software revolution that rebuilt manufacturing, retail and e-commerce over the last two decades has barely touched company formation. The answer is structural: governments own the registries, and just as they monopolized the issuance of money, they've monopolized the chartering of companies. Any independent platform that wants legal validity for what happens on it has to sync back to that registry — unless the law says the company itself can be the ledger of truth, which, as we'll get to, a couple of U.S. states now allow.

Because governments own the plumbing, the plumbing stays clunky almost everywhere:

Singapore brands itself a "Smart Nation" and still restricts filing to licensed agents who employ local "Qualified Individuals" to manually key data into ACRA's own portal — no meaningful API, despite the branding. Japan's registry still runs on the "chop," a physical stamp standing in for a signature. Hong Kong lets you incorporate and manage a company online without an intermediary, which is genuinely better than Singapore, but insists on a manual Inland Revenue stamp before certain share transfers can even reach the Companies Registry. New Zealand and Abu Dhabi both built modern, API-accessible registries — but both are jurisdictions few founders are choosing their entity stack around. The UK's Companies House has APIs too, of an older vintage. And the U.S. splits the job fifty ways by state, most of them low-tech and several still paper-only — the one meaningful difference being that U.S. corporate law asks less of the registry and puts more of the ledger-keeping responsibility on the company itself.

That last detail matters more than it looks. It's the crack a couple of states have started prying open.

C. Where blockchains and AI actually start to fix it

Delaware and Wyoming have both amended their state law to let a blockchain serve as a company's official "ledger of truth" for share ownership and certain corporate records, provided the smart contract meets specific state requirements. That's a bigger deal than it sounds: it means a company formed in either state can issue tokenized shares with real legal effect, with transfers happening peer-to-peer on-chain instead of through a spreadsheet that nobody's registry actually recognizes. No government is putting its own registry on a blockchain yet — every on-chain transaction still eventually needs mirroring on an official ledger in most jurisdictions — but Delaware and Wyoming have effectively said: if the smart contract does the registry's job properly, we'll treat it as if it already happened correctly. That's the first real crack in "fiat companies" — registries whose validity is monopolized by government fiat rather than by any actual technical necessity.

AI is starting to work the other end of the same problem — not formation, but the governance grind described above. Director changes can be verified against on-chain governance rules and executed by smart contract instead of chased across time zones by email. Capital increases — new shares, convertible instruments — can be validated against a shareholder agreement and issued automatically, with dilution calculated and cap tables updated in real time instead of reconciled by hand weeks later. Board votes can have quorum and voting rights checked automatically, resolutions executed on-chain, and an immutable record kept without anyone printing a PDF at 1 a.m. in a hotel lobby. None of this requires exotic technology — it requires a blockchain willing to be the ledger of truth, which is exactly what Delaware and Wyoming just decided to allow.

The genuinely speculative frontier is autonomous AI agents incorporating themselves — an LLC wrapper gives an agent liability protection, the ability to hold a wallet and sign contracts, and a legal counterparty that humans and institutions know how to deal with. Nobody has fully worked out what it means for an AI system to be a "member" of an LLC. But the fact that the question is being asked at all is a sign of how far the "ledger of truth" argument can travel once a jurisdiction accepts it.

The pattern underneath all of this

None of the friction described above is really about tax rates, and neither is the fix. The jurisdictions still stuck in analog mode — Singapore's QI bottleneck, Japan's chop, Hong Kong's manual stamps — aren't behind because they lack money or talent; they're behind because their registries are government monopolies with no competitive pressure to modernize, and in some offshore centers, actively kept inefficient because the friction itself is the local economy. The jurisdictions pulling ahead — Delaware and Wyoming on the ledger-of-truth statutes, BVI and Cayman on speed and tax neutrality for the entities that sit on top of an entity stack — are the ones where the law got out of the way early enough for the technology to matter.

How Otonomos helps

This is precisely the gap Otonomos exists to close: forming and maintaining entities in the jurisdictions where the paperwork has actually caught up — Delaware and Wyoming for U.S. structures that can use a blockchain as their ledger of truth, BVI and Cayman for the fast, tax-neutral holding and treasury layer — all from a dashboard instead of a filing agent's inbox. Browse the full jurisdiction catalog or talk to us about which structure fits what you're building.

Talk to Otonomos about forming your company the modern way: Book a free call

Source: Otonomos, "Company formation and corporate services: the last analog bastion of the business world", The Otonomist, May 2025.